An article by the excellent rural reporter Sue Neales, examined the sales and purchases of irrigation water rights for agriculture in the Murray-Darling Basin (agriculture uses about 90 per cent of water collected in dams for industry and personal consumption). The focus of the article was on the overseas purchasers of the water rights, the prices of which have risen strongly – high security rights now trade at $3000 per megalitre, more than tenfold the price 15 years ago.
Reasons for this increase include enhanced agricultural demand from overseas, but the most significant cause has been the curtailment of water supply for agricultural use and its diversion to a panoply of environmental uses. The policies (and John Howard started the ball rolling) are taking 2,750 gigalitres per annum from the region (out of 7,000 gigalitres “high security” and 10,000 gigalitres in total of water available) from productive agriculture to uses designated as “environmental”.
These diversions from productive use started with claims about salinity, which were driven by the ACF and WWF and supported by their spokespeople in the government owned media showing pictures of salt-infused farmland. The facts are that only 0.4 per cent of farmland showed any signs of salinity and almost all of this was due to natural salt outcrops.
The initial production-suppressing measures were built upon during the millennial drought under which we were supposedly to see the entire Murray system drying up. In addition to salinity being proved to be a hoax, rainfall is, of course, unchanged from that observed over the past 200 years.
But why let facts waste a good crisis?
Farmers responded to scare campaigns fomented by activist groups by looking for compromises little realising that for their opponents each concession was only a staging post for the next claim. Hence the momentum is developed, institutions are in place and rolling back the regulatory tide becomes extremely difficult. And it goes without saying that nobody brings the scaremongers (including Garnaut and Flannery) to account or ridicules the politicians (led by Tony Burke) for their gullibility.
One institutional reason why the regulatory momentum cannot be wound back is the changed nature of the agricultural bureaucracy. Over the past two decades Primary Industry Departments have been transformed from ones that aggressively lobbied for favours to farmers (fertiliser subsidies, drought relief etc) into agencies which wish to constrain output by regulatory restraints including reducing the producers’ use of environmental resources. They have become the accomplices of the green activists.
In Sue Neales’ piece Commonwealth Water Minister Ann Ruston is quoted as saying, “the return of profitability to the citrus and table grape industry and the boom in almond investment is testament to the benefits of placing a real value on Murray irrigation.”
What does that mean? The Murray region, which dominates Australian irrigated agriculture, has always seen water traded and therefore a real price on water.
The higher cost of water has certainly expedited water conservation measures as farmers invest in capital to avoid water usage. But many such expenditures are made viable only because of the artificially enhanced costs of water that stem from the policies of restraining its productive use. As such they have negative benefits.
It is, however, typical that politicians, under the influence of their environmentalist departments, should see merit in policies that have reduced real income levels. It’s almost like seeing advantages in forcing the greater efficiency of the alimentary canal in processing a food supply that has been halved or, to use a more topical example, seeing benefits in economy of energy usage from taxing coal and gas!